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Will Rupay Card destroy Visa and Mastercard?

Rupay card

Background of Rupay Card

In 2009, RBI  had asked the Indian Bank Association to create a non-profit payment company that will design a Swadeshi payment card. The card was tentatively referred to as India Pay.

After years of planning, NPCI was entrusted with the implementation and finalized the name of the proposed card as RuPay. NPCI conceived it as an alternative to Mastercard and VISA while consolidating and integrating various payment systems in India.

Rupay Card Came into Competition with VISA and Mastercard

Government backing Rupay cards has made a big issue for Visa and Mastercard. Rupay cards got promotion under Jan Dhan Scheme where the government has made it mandatory to issue them for people who are opening their accounts under this scheme.  This leads to a jump in the market share of the Rupay cards.

As per the data released by RBI, Around 60% of the card market has been captured by these, according to the National Payments Corporation of India (NPCI) in comparison to 2017 where its share was 15%.

Benefits Rupay Card is Providing to Banks

Zero -MDR norm by the Indian government which states that no fees can be levied to merchants for transactions on these networks has given added advantage to Rupay cards.

The operating cost of Rupay Card is too less compared to Visa and Mastercard. As a Domestic Card, there are No quarterly fees that have to be paid by banks on the Rupay card but there are charges on Visa and Mastercard which bank has to pay Quarterly basis.

Rupay Unable to Increase its share In Credit Card Market

Although Rupay Card Market share has increased, there is still a lack in volume and value of transaction of Rupay cards. Internationally, Due to Experience and cost advantage, Visa and MasterCard are way ahead of Rupay card in credit card market share.

Undoubtedly, Rupay has increased its share in the Debit Market but is facing tough competition in the credit card market.The Deal provided by Visa and Mastercard with their Credit card is way too good to attract customers which Rupay is lacking.

Problem Faced by Mastercard and Visa

The government is backing the Rupay card which led to a decline in the market share of Visa and Mastercard. Mastercard has complained to the US government about the problem faced in India due to the Rupay Card. It alleges that the government of India is promoting Rupay cards which decline their market share and it will affect their profitability too.

But this is not only in India, other countries like China, Russia are also backing their domestic cards. 

Apart from this one major setback came for Mastercard when Rbi ban them to issue new cards with effect from July 22, 2021, for Non-Compliance of RBI directions on Storage of Payment System Data which directed system providers to ensure that all data related to payment systems must be stored only in India. This move forced the bank to shift to Visa Card or Rupay Card from mastercard.

Future Of Rupay Card

Rupay Card is giving tough competition to their Rivals, but still, it has a long way to go. While Visa and Mastercard have more premium customers, Rupay mainly has First-time consumers.Now, Rupay is trying to build relationships with Premium customers, it will take a little while to do so but the Vision of Rupay Card will make them future leaders in the Next decades.

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